Nio Inc. (NYSE: NIO), a leading Chinese electric vehicle (EV) maker, has announced an expansion of its new share offering, aiming to raise approximately HK$4.03 billion (USD $515 million) to fund research and development (R&D) and reinforce its financial position. The company revealed that it will issue 136.8 million new Class A ordinary shares, an increase from the initially announced 118.8 million shares.
Pricing and Details of the Offering
Nio has priced the new shares at HK$29.46 each, representing a 9.49% discount to its closing price of HK$32.55 on the Hong Kong Stock Exchange on Thursday. The offering will be carried out through offshore transactions to non-U.S. investors under Regulation S of the U.S. Securities Act of 1933.
The EV company expects the placement to be completed around April 7, 2025, subject to the satisfaction of customary closing conditions. The placing agents managing the offering include major financial institutions: Morgan Stanley Asia Limited, UBS AG Hong Kong Branch, China International Capital Corporation Hong Kong Securities Limited, and Deutsche Bank AG, Hong Kong Branch.
Intended Use of Funds
Nio plans to use the net proceeds from the share placement to strengthen its balance sheet and fund R&D for EV technologies and new products. The capital injection will also be allocated toward general corporate purposes.
The decision to raise funds comes as Nio faces mounting financial pressure. The company’s recent financial report revealed that as of December 31, 2024, its current liabilities exceeded its current assets. While Nio stated that it has sufficient resources to sustain operations for the next 12 months, the capital raise is seen as a strategic move to stabilize its financial position amid slowing vehicle deliveries and increased competition.
Challenges Facing Nio
Nio has struggled with weak delivery numbers in recent months, especially for its L60 SUV, the first model launched under its sub-brand, Onvo. The vehicle’s underwhelming performance has fallen short of market expectations, weighing on the company’s growth trajectory.
The company’s Q4 2024 earnings report, published on March 21, flagged financial risks as Nio’s operating expenses continued to outpace revenue growth. The expanded share placement is viewed as a necessary step to inject liquidity and support ongoing innovation efforts.
Stock Performance and Market Reaction
Following the announcement, Nio’s stock price showed volatility as investors reacted to the discounted share offering. Although the discount price was seen as a short-term setback for shareholders, analysts believe the move could strengthen Nio’s long-term outlook by bolstering its R&D capabilities and financial stability.
The Road Ahead for Nio
The expanded share offering signals Nio’s determination to maintain its competitive edge in the highly dynamic EV market. With the proceeds directed toward technological advancements and new product launches, the company aims to accelerate its growth and regain momentum in vehicle deliveries.
However, the discounted share price may place temporary downward pressure on Nio’s stock. Investors will be closely watching the company’s delivery figures and financial performance in the coming quarters to assess whether the capital raise translates into improved profitability and market share.
